Nigeria Matters

N80b Rice Import: Solution Or Illusion To Food Shortage

Food security refers to the availability of food and one’s access to it. A household is considered food secure when its occupants do not live in hunger or fear of starvation. World-wide around 852 million men, women and children are chronically hungry due to extreme poverty, while up to 2 billion people lack food security intermittently due to varying degrees of poverty (source: FAO, 2003). As of late 2007, increased farming for use in biofuels, world oil prices at nearly $100 a barrel, global population growth, climate change, loss of agricultural land to residential and industrial development, and growing consumer demand in China and India have pushed up the price of grain. Food riots have recently taken place in many countries across the world. It is becoming increasingly difficult to maintain food security in a world beset by the phenomena of peak oil. A direct relationship exists between food consumption levels and poverty. Families with the financial resources to escape extreme poverty rarely suffer from chronic hunger; while poor families not only suffer the most from chronic hunger, but are also the segment of the population most at risk during food shortages and famines.

Global supplies of food far outstrip demand. Chronic hunger affects more than 800 million people in the world and it is, in and of itself, a potentially deadly condition. Far more people die from causes related to chronic hunger than to famine. Chronically hungry people are exceptionally vulnerable when famine strikes. They have fewer resources to protect themselves and their families and are already living on the margin of survival. This situation come to pass if poor people do not have the resources — whether land, tools or money–needed to grow or buy food on a consistent basis, when war disrupts agricultural production, and governments often spend more on arms than on social programs, as a result of over-consumption by wealthy nations and rapid population growth in poor nations strain natural resources and make it harder for poor people to feed themselves, and if lack of access to education, credit and employment — a recipe for hunger — is often the result of racial, gender or ethnic discrimination. In the final analysis, hunger is caused by powerlessness. People who don’t have power to protect their own interests are hungry. The burden of this condition falls most acutely on children, women and elderly people. The UN’s Human Development Index places Nigeria among the world’s poorest countries. Millions of Nigerians in the world’s 154th poorest country face a life of poverty, unemployment, hunger, and early death. About 50% are illiterate and some 40 million go hungry or are living a hand-to-mouth existence. Nearly one-third of the population will not live beyond the age of 45.

And yet the successive government in this nation denied the existence of these people! The reason is obvious. To admit the existence of these hungry Nigerians is to admit the failure of a regime whose stated goal was to eradicate poverty, which continues to walk tall in a country that is an oil-producing nation. However, statistics never tell the whole story. The government’s Poverty Alleviation Programme has the stated goal of bringing food to hungry, poor Nigerians. So far, they have failed to do that. In the past five years government officials have lined their pockets and swelled their bank accounts with money that could have been used to feed hungry Nigerians. This year, the government had a budget running into trillions, more money than ever before. But not a dime will find its way into the pockets of the poor toiling masses. Yet these people are not invisible. If you have the political will, signs of growing poverty are not hard to come by on the streets of 21st century Nigeria. They strike you in the face. One must possess, however, the will to look beyond the deceptive patina of modern sky-rise buildings that lines the highways of the Federal Capital Territory to the shanties and dirt roads that are the inevitable consequences of decaying capitalism. Thousands of peoples face a life of hunger and misery in the sinkhole of the world’s second most corrupt country. Lagos, the commercial heart of Nigeria, contains some of the most shocking testimony of poverty existing alongside reckless affluence.

Already, the government has allocated 80 billion naira for the massive rice importation (117 Naira=US$1). The decisions were reached at a meeting between President Umaru Yar’Adua and the governors of the country’s 36 states, held in the capital city of Abuja Tuesday. Nigeria had earlier released 40 million metric tones of grains from the reserve. The rice to be imported will be sold to Nigerians at subsidized prizes, perhaps about half of the current all-time high price of between 10,000 (US$85) and 12,0000 naira (US$102) per bag. According to the World Bank, the price of foodstuffs has gone up 83% in three years due to, among others, the effect of climate change on agricultural production and the issue of reduced production area, triggered by the increase in the use of land to grow crops for transport fuels instead of food.

With the oil boom now firmly in the past and a major restructuring of the economy underway, this regime is throwing its doors open to large scale commercial penetration. In an effort to stabilize the economy and solve the debt crisis, the Nigerian government is attempting to make the economic climate generally more amenable to foreign investment. Foreign companies, especially multinationals willing to invest in agriculture, appear to be the chief beneficiaries of this policy, but, to date, few multinational corporations have taken advantage of the government’s incentives.

In the 1970s Nigeria‘s economy changed radically from one based on the appropriation of surplus from peasant farmers to one based on capital intensive petroleum extraction. Revenue from massive oil earnings financed vast and often extravagant public investment in infrastructure, in large scale agricultural programs and in the manufacturing sector. But the world oil glut of the early 1980s burst the bubble; oil prices tumbled, oil earnings slumped and the economy contracted drastically. Nigeria‘s external payments fell heavily into arrears, despite austerity measures, including import curbs and public expenditure cuts, imposed by the government of Shehu Shagari, who came to power in 1979. After failing to reach an agreement with foreign banks to borrow $2 billion to settle short term debts and to pay for imports, the government had to reconcile itself to approaching the International Monetary Fund (IMF). As negotiations with the IMF and a consortium of banks-an agreement with one was dependent on agreement with the other-continued throughout 1983, the government imposed further austerity measures which resulted in major lay-offs in both the public and private sectors.

Amid daily disclosures of government mismanagement and corruption, the Nigerian people became increasingly dissatisfied with the austerity measures and the Shagari government. As a result, most Nigerians welcomed the coup on December 31, 1983 which ousted Shagari’s regime and installed Maj. Gen. Mohammed Buhari and the Supreme Military Council. But the honeymoon did not last long as austerity measures were pursued with even greater vigor by the new regime. There were further cuts in public expenditures, a wage freeze was imposed, and a government purge of civil servants-ostensibly to rid the administration of corruption-turned into wholesale layoffs in the public sector. Still stricter import curbs led to a further contraction of manufacturing and more extensive lay-offs. Nigerian workers, bearing the brunt of the austerity measures, complained that they were being made to pay for the crisis created by the former rulers, but the labor movement, weakened by the lay-offs, was unable to resist the retrenchment.

By January 1984, when the military took power, Nigeria‘s short term arrears were estimated at $6 billion. Negotiations with the IMF and the banks resumed shortly after the coup, but the government refused to devalue and the talks were suspended in June 1984. The Buhari regime refused to bow to the pressure of the IMF and for over a year the IMF negotiations remained stagnant. This inevitably meant further austerity measures and therefore more widespread popular dissatisfaction with the regime. The 1985 budget maintained the wage freeze, while cuts in pay and welfare proceeded at a brisk pace. On July 27, 1985, Buhari was ousted by yet another coup and Maj. Gen. Ibrahim Babangida was installed as the new Nigerian military leader. In one of his first statements after the coup, Babangida pledged the new regime’s support for a break in the deadlock between the IMF and his country. Although efforts to refinance trade arrears of about $2,500 million and uninsured debts of around $3,200 million, as well as trade arrears guaranteed by export credit agencies continue, the IMF and the Nigerian government have been unable to resolve their differences over devaluation, oil subsidies and trade controls. Nevertheless, the programs of both Buhari and Babangida are along the same lines as IMF “stabilization” measures-massive public spending cuts, a wage freeze and major lay-offs in the public sector-which make up the preconditions for an IMF loan. We are doing all we can to put our house in order, to restructure our economy,” said an official of the Babangida regime. “A lot of sacrifices have already been made by our people.”

While an agreement with the IMF is still a long way off, such measures are creating the climate for renewed foreign interest in Nigeria. In the agricultural sector this has been backed up by government moves to encourage large scale commercial farming, particularly by foreign companies. Agriculture is the sector that has been squeezed least in the austerity measures of the 1980s, because of its pivotal role in the recovery of the economy. Agriculture imports are a huge drain on the country’s resources, costing upwards of $1 billion annually. Amid drastic cuts elsewhere, many of the agricultural projects initiated in the flush 1970s have been maintained. Nigeria‘s agricultural strategy in the 1970s had three main components. Eleven River Basin Development Authorities (RBDAs) funded by the federal government were set up in the mid 1970s to develop irrigated cultivation, particularly of rice and wheat.

Second, Agricultural Development Projects (ADPs), funded jointly by the World Bank, and the federal and state governments, were set up, originally in the northern states and subsequently in the middle belt and south. The ADPs aimed to promote “integrated rural development”-peasant farming was to be bolstered by introducing improved seed and fertilizer, providing credit and training, and developing rural infrastructure. Both of these programs – but particularly the RBDAs – swallowed up vast sums of public money, contributing to Nigeria‘s financial crisis of the 1980s. But the Nigerian government claims that the ADPs, despite their expense, have done much to improve the country’s ability to meet its subsistence needs in the last several years. “Despite widespread drought, Nigeria has not asked for food assistance,” said a Nigerian official. “This is proof that the ADPs work.” Third, large scale private farming was encouraged in the later 1970s through an array of concessions and incentives. The Land Use Decree of 1978, which vested land in state governments, was designed to make land acquisition easier for commercial farmers. An Agricultural Credit Guarantee scheme was set up in the same year, under which the federal government and the Central Bank of Nigeria guaranteed up to 75 percent of loans lent for agricultural purposes. And specifically to encourage foreign investment, foreign firms were allowed to hold up to 60 percent of the shares in agricultural ventures, as against 40 percent in most other sectors under “indigenization” regulations.

But despite these incentives, most foreign firms remained uninterested. According to Central Bank of Nigeria figures, foreign private investment in agriculture, forestry and fishing remained at approximately the same level of $130 million a year between 1979 and 1981, but the share put into agriculture of total foreign investment actually fell back between 1978 and 1981 from just over 4 percent to just over 3 percent. Foreign companies were apparently holding out for additional concessions from the government, particularly over repatriating profits and remitting salaries. One multinational that did respond to the incentives was Texaco, which set up Texagri (Nigeria) Ltd. in 1978 with a 1,400 hectare cassava plantation and gari factory in Ogun state. The project used high-yielding and pest-resistant seeds developed at the International Institute of Tropical Agriculture at Ibadan, but initial results were poor. Although the crop was good in 1983, so far the project has made little profit. The company’s expectations, however, remain high.

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